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Hutchison Whampoa chairman Li Ka-shing has denied the GBP8.75 billion (about HK$113.57 billion) sale of the company's stake in Orange marks the start of a programme to sell down its global telecoms assets.

 German engineering conglomerate Mannesmann will buy Hutchison's 44.81 per cent stake in the British mobile-phone operator as part of a GBP19.8 billion takeover offer, the companies said yesterday.

 The deal, to be settled partly with Mannesmann shares, will see Hutchison become the German company's largest shareholder with a 10.2 per cent stake.

 'I have to say that we have not got rid of Orange, we have just taken a big stake in Mannesmann,' Mr Li said.

 'This agreement will benefit the three parties involved - Orange shareholders, Hutchison and Mannesmann.'  Mannesmann will pay GBP16.29 per Orange share, a 21.65 per cent premium to the company's closing price on Monday, the day before the takeover talks were made public. Orange was listed in March 1996 at GBP2.05 a share.

 Of the consideration, GBP9.89 per share will be paid in Mannesmann shares, GBP3.20 in cash and GBP3.20 in debt notes.

 The deal was prompted by a trend of rapid industry consolidation, and will create a European telecoms powerhouse with 20 million mobile-phone subscribers.

 Orange is Britain's third-biggest mobile-phone operator while Mannesmann is seen as one of the fastest-growing telecoms companies in the world.

 Mr Li said Orange shareholders would own 23.2 per cent of the combined Orange-Mannesmann after the deal.

 Hutchison was now looking at acquiring new telecoms businesses, he said, although he declined to name them.

 Mr Li said he did not agree with criticism that Hutchison's telecoms businesses were too scattered and that there was a lack of synergies between various country operations.

 Hutchison has a sprawling portfolio of telecoms interests across Europe, Asia, the US, Africa and the Middle East.

 'All our various managing directors are doing very well. We have been very successful in the mobile-phone business around the world and our fixed-line telephone in Hong Kong is doing well also,' Mr Li said.

 Following completion of the deal, Hutchison's gearing will fall to an effective 10 per cent from 70 per cent.

 'I can take the money returned to us from this deal and invest it all in new businesses, and we would still be a very healthy company,' Mr Li said.

 Despite being the largest shareholder, Hutchison will hold only one seat on Mannesmann's 14-member board.

 Mr Li said the Mannesmann stake would be a long-term strategic investment, adding that the deal included a lock-in clause which precluded Hutchison from selling any of its Mannesmann shares for 18 months.

 'We are confident in the future of Mannesmann. It is a very good company with strong potential,' Mr Li said.

 Hutchison has ruled out the possibility of a special dividend to return some of the cash raised in the deal to shareholders.

 It will book the $113.57 billion proceeds as an exceptional profit before expenses, having recouped its investment in Orange from the company's flotation in 1996.

 'Hutchison is growing very fast and has investments in 24 countries, some of them offering very good opportunities, so our capital requirements are still very big,' Mr Li said.

 Hutchison shares rose 50 cents, or 0.65 per cent, to $76.50 yesterday.



Orange stake sale to Mannesmann for $113b to benefit all, says Hutchison